Transfer Balance Cap Indexation – Up to $1.9M

Significant advice opportunities could arise before and after 1 July 2023 for clients who have (or are eligible to commence) a retirement phase income stream if the Transfer Balance Cap (TBC) is indexed to $1.9m.

The recent release of the December CPI figure locks in a general transfer balance cap of $1.9m from 1 July 2023 – unless the legislation is specifically changed to stop that from happening. Whilst anything is possible in the lead up to a Federal Budget, the government has indicated on a number of occasions recently that they have no intention of stopping this level of indexation.


This increase will have a number of important consequences for clients right now, including:

  • For clients who are yet to commence a retirement income stream, the benefit to holding off on commencing their pension until after 1 July.
  • Helping to determine entitlement to any proportionate indexation, which may help to avoid exceeding their TBC.
  • Determining whether any additional super can be transferred or added to a retirement phase income stream (may include a pension refresh).
  • Reviewing Non-Concessional Contribution opportunities to identify new contribution eligibility and monitoring this, once the NCC cap for next financial year is confirmed.


Personal Transfer Balance Caps

While the general cap will increase to $1.9m, not everyone will get this same increase.


Those who have already used up their transfer balance cap in full at some point, don’t get any value at all out of the indexation. Even switching off pension(s) entirely before 30 June 2023 (so that they have none in place at 1 July 2023 when the general transfer balance cap increases) won’t change anything. The indexation rules are smart – they look back over a person’s history and find the moment when they had used up the most (in percentage terms) of their transfer balance cap. If that was (say) 75% back in 2021, only 25% of the $200,000 indexation ($50,000) will be available from 1 July 2023. That’s true even if the client has subsequently taken pension commutations and has far more of their cap available “now”.


There will also be plenty of clients, who haven’t previously started a retirement phase pension, who will wonder whether they should wait until 1 July 2023. It means they will get the full value of the indexation and potentially be able to put up to $1.9m into a retirement phase pension in the future. Be careful though. There are plenty of cases where it’s still worthwhile locking in a pension “sooner rather than later” to start benefiting from the tax exemption on investment income.


While lots of people have transfer balance caps that are nice neat numbers ($1.6m, $1.7m or $1.9m) there will now actually be 301 possible transfer balance caps ($1,600,000, $1,601,000, $1,602,000 and so on) depending on exactly when an individual’s pensions started and how large they were at the time. Spare a thought for the ATO, advisers and accountants who need to watch these numbers.


Contribution Limits

But don’t forget that contributions are different.


When it comes to non-concessional contributions, everyone benefits from this increase in the general transfer balance cap.


Remember that the non-concessional contribution cap in 2022/23 is $nil for everyone with a total superannuation balance at 30 June 2022 of $1.7m or more. For 2023/24 the relevant threshold will be $1.9m at 30 June 2023. This applies to everyone, even those whose personal transfer balance cap was locked in at $1.6m or $1.7m and has been used in full.


A big question for many of us is the other contribution thresholds for people wanting to use the bring forward rules next year.


In 2022/23, for example, someone considering making three years’ worth of non-concessional contributions at once (3 x $110,000, i.e. $330,000) must have had a total superannuation balance at 30 June 2022 of less than $1.48m.


This threshold will definitely change for 2023/24 but at this stage, we can’t say for sure what it will be. It depends on whether or not the contribution caps themselves also change (i.e., the $27,500 for concessional contributions and $110,000 for non-concessional contributions). The threshold for being eligible to make three years’ worth of non-concessional contributions is worked out as:


General transfer balance cap less 2 x the normal annual non-concessional contributions cap. While the general transfer balance cap increases in line with inflation, contribution caps increase in line with Average Weekly Ordinary Time Earnings. The relevant figures won’t be released until next month. So the magic threshold for someone wanting to use the three year bring forward rules could be a total superannuation balance at 30 June 2023 of either:


$1,900,000 – $220,000 = $1,680,000 (if the contribution caps don’t increase)


$1,900,000 – $240,000 = $1,660,000 (if they do)


This will definitely impact those wanting to maximise contributions in the next few years.


Let’s consider someone with a total superannuation balance of $1.47m at 30 June 2022 (just below the threshold for making three years’ worth of non-concessional contributions). If they contribute $330,000 “now”, they will clearly be unable to make further non-concessional contributions until 2025/26.


A better strategy may be to contribute only $110,000 now as long as they can be reasonably confident their balance will remain below $1.66m at 30 June 2023 and they will be eligible to make super contributions next financial year. This leaves open the option to contribute a further $330,000 (or even $360,000 if the contribution caps increase) in 2023/24.



The expected increase in the superannuation focused Transfer Balance Cap may create significant opportunities for clients looking to either maximise balances in the tax effective super environment or commence a tax free retirement income stream in the near future.


Please contact us if you wish to confidentially discuss your specific circumstances or would like more information about how this TBC increase could apply to you.


We are here to help

Calibre Private Wealth Advisers provides financial leadership and peace of mind for successful professional, business owners and their families.


We engage our clients in real conversations around their life and then help them use the money they have to get the best Return on Life.


If you have any questions/thoughts in relation to this article or have a need for some advice and would like to discuss your particular situation, please contact Gordon Thoms or David Conte at Calibre Private Wealth Advisers on ph. (03) 9824 2777 or email us here.


The information contained in this article is of a general nature only and may not take into account your particular objectives, financial situation or needs. Accordingly, the information should not be used, relied upon or treated as a substitute for personal financial advice. While all care has been taken in the preparation of this article, no warranty is given in respect of the information provided and accordingly, neither Calibre Private Wealth Advisers, its employees or agents shall be liable for any loss (howsoever arising) with respect to decisions or actions taken as a result of you acting upon such information.




This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial and tax/or legal advice prior to acting on this information. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product. The material contained in this document is based on information received in good faith from sources within the market, and on our understanding of legislation and Government press releases at the date of publication, which are believed to be reliable and accurate. Opinions constitute our judgment at the time of issue and are subject to change. Neither, the Licensee or any of the Oreana Group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Gordon Thoms and David Conte of Calibre Private Wealth Advisers are Authorised Representatives of Oreana Financial Services Limited ABN 91 607 515 122, an Australian Financial Services Licensee, Registered office at Level 7, 484 St Kilda Road, Melbourne, VIC 3004. This site is designed for Australian residents only. Nothing on this website is an offer or a solicitation of an offer to acquire any products or services, by any person or entity outside of Australia.

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